Household charge to worsen personal debt crisis

THE consumer debt crisis is deepening, with the amount of personal debt being pursued through the courts rising tenfold in five years.

As the Government announced plans to squeeze another €100 a year out of hard-pressed families with its household charge, figures show €230 million in debt judgments were registered against consumers in the first six months of this year, compared to €23m in the first six months of 2007.

But these numbers underestimate the scale of the problem as they only represent High Court judgments. Thousands of other cases are pursued in the district and circuit courts.

The data was compiled by information-gathering firm Irish Judgments, which also found the value of debt judgments against businesses increased fivefold over the same period.

The company’s chairman, Malcolm Hurlston, said: “Ireland stands out among all the jurisdictions where we collect information as having a rapidly increasing debt problem.”

The Government has signalled new out-of-court debt settlement mechanisms along with protections for indebted consumers, as recommended by the Law Reform Commission, but their promised Personal Insolvency Bill will not be ready before next year.

Noeline Blackwell, director of the Free Legal Advice Centres, said action is needed urgently.

“What’s missing about the whole question of personal over-indebtedness is not statistical information, technical knowledge or legal expertise. What’s missing is a political sense of urgency to deal with the problem.”

Meanwhile, it has emerged that up to 12,500 ageing parents could be forced to fork out for their children’s mortgages if they fall into arrears.

It is estimated that thousands of parents of those who bought in the past few years agreed to act as guarantor on the mortgage, leaving them responsible if the mortgage holder falls into difficulty.

Frank Conway, director of moneycoach.ie, said parents of first-time buyers may start to see guarantees called in.

The Irish Banking Federation said from 2005 to 2008, about 125,000 first-time buyer mortgages were originated.

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